BANNOCKBURN, IL – IPC today balked at China’s revaluation of its currency, saying the move will have “little or no impact” on trade imbalances or domestic manufacturing in the short term.
Last week, in response to increasing demands for currency reform, the Peoples Bank of China stopped tying the value of its currency, the yuan, to the U.S. dollar. However, in breaking its 10-years-long practice, the central bank restricted trades of the yuan to a 0.3% band.
In a press statement, IPC announced its disappointment with China’s recent currency reforms.
Dan Feinberg, chairman of IPC’s government relations committee, said, “In the short term, these changes will have little or no impact on the balance of trade and the U.S. electronics manufacturing market sector. However, China’s reforms could open the door for progress toward the GR committee’s ultimate goal of a 40% revaluation against the dollar.”
John Kania, IPC government relations director, said, “China’s new system is a small step in the right direction, but more needs to be done. IPC will continue to support the China Currency Coalition and the Ryan-Hunter bill that more aggressively fixes the currency problem for IPC members.”
IPC is a member of the China Currency Coalition, an assembly of trade groups who seek currency reform. H.R. 1498, sponsored by U.S. Representatives Tim Ryan (D-OH) and Duncan Hunter (R-CA) and also known as the Chinese Currency Act of 2005, states that China’s manipulation of its currency violates U.S. trade laws and reiterates the country’s right to penalize the PRC.
The statements echoed those of other trade groups, which hailed the move as a step forward but put China on notice that continued reform is a must. Last week, National Association of Manufacturers president John Engler said “We are pleased that China has now moved away from a fixed dollar peg to what could be described as a ‘crawling peg’ based on a basket of currencies.
“China’s new currency system offers the possibility for continued upward movement of the yuan in the coming weeks and months, and that is what we will be looking for,” Engler said.
Also last week, Dave McCurdy, president and CEO of the Electronic Industries Alliance (eia.org), and a former U.S. Congressman, said, “We have long encouraged the idea that the yuan should be allowed to float and have advocated the approach of tying the yuan to a broader basket of international currencies, as they have chosen to do. We believe this pragmatic approach will allow the yuan’s value to rise against the dollar in a way that will allow U.S. manufacturers to compete more fairly in the world market and will not destabilize China's domestic economy.”
